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The big, ugly affiliate marketing scam (venturebeat.com)
191 points by PhilipA on Aug 13, 2013 | hide | past | favorite | 119 comments



You have a discount code at your checkout? So basically instead of capturing the sale you're ASKING the buyer to google for discount codes.

Think of a sneakier way to give people discount codes that doesn't show it RIGHT THERE ON THE FORM. It makes me feel like I'm getting ripped off when I see discount code and I don't have one.


I always thought this about discount code boxes so when I finally had a store checkout of my own to play with I added something like "Got no code? Enter code YAY for a small discount :-)" and it gave 4% off (almost nothing at my margins). Surprisingly, under half of users even bothered to used it :-)


That's a clever customer focused solution.


Great margins … what was your business?


Advertising, job ads, training, screencasts, etc. That is, something which often has a marginal profit margin of 99%+ so 4% off is an easy experiment (unlike for many physical products).


Exactly. The customers are clearly feeling cheated when they don't have a coupon code. Enough to leave the site and start googling around in the hope of not being a sucker. As it is now, even when customers do come back and place a sale, they will never know if they paid a premium because they couldn't find that coupon. Not a good way to treat a customer, I think.


Honest question: when you go to a grocery or department store and they ask if you have any coupons or a rewards card, do you feel like you're getting ripped off? I may feel like I've missed out, but never "ripped off." When I've reached the checkout page it implies this was the best deal I could find.

I do appreciate discounts, but don't feel entitled to them, especially if I'm a first time customer (or opted out of marketing emails). But maybe I'm an outlier and a sense of entitlement is the norm these days.


Yes I do. In that case it's a little harder to turn back but I can't help but feel a little like a chump.


I feel like a bit of a naughty schoolboy when I go off and find vouchers, it just feels a little bit wrong (but I still do it)


The equivalent is when you go to a new store (or one you go to infrequently) and they ask you for a rewards card to get the discounted price. One or two times, I've signed up for one. More than half a dozen times, the cashier is nice enough to use their card for you. At one store, I got grief from the cashier saying you have to sign up for the card at the customer service desk, and that he/she couldn't use theirs. Guess which store I make it a point never to go to?

I understand these discounts are designed to promote frequent patronage in some cases. But it can definitely piss customers off.


FWIW I do my best to completely avoid stores that have loyalty cards. I consider it unfair to expect people to give up their privacy for normal pricing - the rich people get to keep their privacy and the poor people don't have a choice.

And yes I deliberately said normal pricing, the only study that has been done of before and after pricing once loyalty cards were introduced showed that prices are just inflated such that the loyalty card brings them back into line. Best to just shop somewhere without loyalty cards at all.


I've never had anyone directly ask me at the till, but if they did then yes psychologically I probably would feel that I was being ripped off. I realise that vouchers are available for a lot of shops these days, but if you push the fact into someone's face then it's basically reminding them that they could have had it cheaper.

I have exactly the same thing with the £1.50 for one/£2.00 for two type offers. If I don't want two of them, the very fact that they are highlighting that they are happy to sell them at £1 each makes the £1.50 price look like a rip off, especially if they've put the single unit price in smaller text (it says to me "yes, we'll sell you just one if you really, really want - but we're charging you a massive premium for doing it). I sometimes find myself not buying the item at all as a result.


I always get a rewards card the first time I'm there as long as I get a discount for even using it once. 90%+ of the things I buy at stores I usually have discounts on.


His response to this doesnt surprise me at all, completely misses the point of the problem but still manages to blame someone else for it.


What we do as an e-commerce provider is use the label 'Gift Voucher'. This reduces the drop off considerably as customers assume that this is something that would have been sent to them already.

Our clients just have to mention in their marketing material to their customers 'gift voucher code' rather than 'coupon code'.


Anytime I see a coupon box the first thing I do is google "X coupon codes". This is a case of someone not understanding their own checkout process.


But he does understand the process, he just doesnt understand how it's his fault, not the fault of the 'shysters'


When you have paper promos and rewards cards floating around it complicates the usability of the alternatives a bit. You end up with asking people to go to custom URLs etc which results in user confusion


Discount codes shouldn't be highly usable.

edit: downvoted, sigh. ok. I'll elaborate. When you give me a discount code field on your checkout page, I automatically open up a new tab and Google around for "your site name discount code". If I can find one that works, you're just losing money for absolutely no good reason. I would've happily checked out without ever thinking of saving 5% on my $50 purchase. (c'mon, $2.50? That's not even a latte!) But, now, I'm obsessed, and I go back into 'bargain hunter' mode. If you're really unlucky, I'll find another site that undercuts you without a discount field, and just use them.

Save yourself the trouble. Apply a coupon via a cookie from a special landing page. I'll feel excited and grateful if one is applied for me at checkout and I won't even think of shopping around any more if I don't have one.


I take it you've never taken a customer service call with an irate customer who couldn't figure out how to use their discount code correctly. If anything, they need to be the most usable part of the checkout experience, believe me


So don't have a field. Problem solved.


What entitlement does the customer have to the discount - surely as long as it's possible to redeem it simply no one customer has a privilege to acquire it?


Customers will call after the sale asking to proactively apply discount codes.

Affiliates will call after the sale asking to proactively apply discount codes (so they get credit).

Customers will complain if a discount code has expired.

Customers will cancel, return and re-buy just to apply discount codes.

Discount codes suck.


(I think you mean retroactively not proactively)


haha yep!


You can take that view, often though that will mean the customer will just find a competitor that will work with them.


No shit. This is why you create a page on your site called "Discount Codes". You put in an email signup and offer a small discount coupon. You get the email address in case they abandon and you can re-market to them, and the discount so that they won't abandon, because they found what they were looking for and will complete the transaction. Google will rank you high because its your page and you catch at least some of the search traffic, and you give them what they want with the discount code and they will shop with you. Any retailer worth their salt knows this. Just because coupon sites can game SEO doesn't mean its a scam, it means they're just capitalizing on the fact that you're blind to your customers' behavior


Which is exactly what Kogan did and it's now the #2 result when you search for Kogan coupons

www.kogan.com/au/kogan-discount-codes/‎

> Regular customers of Kogan know that our products are ALWAYS discounted. Very rarely do we release a Kogan Discount Code or a Kogan Discount Coupon

The #1 result? A scammy looking site but don't worry because "59 people have used this today!" (unsuccessfully of course)


http://www.kogan.com/au/kogan-discount-codes/ doesn't exist (anymore?):

'Sorry, we can't find the page you're looking for'

Screenshot: http://i.imgur.com/LSvh9Av.jpg

You get, however, annoying pop-up window if you access this URL …


Remove the trailing slash (which reappears when the page loads - 304?). I guess there's multiple URLs and some rewrite magic to get to this page for maximum SEO.


Interesting, thanks!


Pizza Hut UK are a good example of this. They have a vouchers page on their website which (obviously) ranks very highly for "Pizza Hut vouchers". It isn't reachable from any page on their site (that I know of), but it means any price-conscious consumers that spend two minutes googling end up with a decent voucher rather than spyware installed on their machine.


I was expecting to read about click fraud, but it was just a newbie's experience with running an affiliate program.

Kogan had some wild expectation that the majority of affiliate traffic would be first-time visitors to his site. When he uses google analytics to estimate that only 1.6% of referrals were new customers, he trashes affiliate marketing as a business.

Unfortunately, he spent no time thinking about how to optimize his campaign to reward affiliates for first-time customers, among other things.


To his credit, he'd already established that changing commissions from 10% to 5% to 1% made almost no difference to the affiliate schemes behaviour. It seems reasonable to assume that "optimising his campaign to reward affiliates" for any particular behaviour is unlikely to be worthwhile, if 50% and 90% reductions in payouts dosn't motivate them to change anything...

Perhaps an "experienced affiliate marketing user" might get different results, but if you're suggesting that a business who'll mislead you and rip you off happily unless you're a sophisticated-enough user of their service deserves a "trashing" any less than used car salesmen deserve their reputation – I think you're wrong. If _you_ come to me knowing your proposal involves you taking 10% commission on sales - where 98.4% of those sales were mine already, I'd call you out as a thief.


If someone chooses to learn the affiliate marketing business through trial and error, more power to them, and I hope they have a lot of cash to burn. There is a lot more to affiliate marketing than giving X% commission for referrals. As I eluded to in my first comment, it is common to pay near 0% commission for return customers and a hefty % for first-time customers. This is a basic scheme that wasn't even attempted before trashing the industry.

I am sure that Kogan has been in business long enough to know not to take what a low-level sales person preaches as fact. Just like Kogan, the sales person also didn't seem to have a clue about affiliate marketing. And, why should he if he can sign new clients who will drop $40K out of the gate?


Thanks for the good reply.

A question though, from someone who's inexperienced but very cynical about affiliate marketing – it that sort of option/complexity; to offer very low commissions for return visitors but large commissions for first-timers, actually available through the sort of "affiliate networks" you'd find by searching online?


Yes, you define exactly what kind of referrals you want to pay for and for how much.


While you raise some important points, but I think the key complaint was that the author felt scammed by the 20% commission they were paying the affiliate program vendor for sales they would already have made. While these programs may have potential benefits, a 20% commission probably does not reflect the value provided to Kogan.


That's the author's problem for not understanding how affiliates work and setting up a commission structure to work for his particular site.


> it was just a newbie's experience with running an affiliate program

No, quoting actual sales volumes, conducting experiments with different commission rates, and measuring and reporting on new customer traffic take this from a newbie's anecdote to a useful, insightful article.


I don't think it's that insightful. The thing to learn is to have your own discount code page/site and that info is in the comments here.


Yeah, he seems to be painting a very broad picture based on an affiliate system that captures referrals at the wrong point in time.


"So basically, the affiliates are claiming commission on a sale that was going to happen anyway"

You have someone in your checkout process. Why on earth would you give them a reason to leave that process and go search for a discount code if you know they won't find any? Assuming they will come back doesn't feel right. What if their search for a discount code didn't prove there wasn't one, but did prove a competitor was going to be a) cheaper, b) a better service, c) offering discount codes, or they got distracted by cat videos on YouTube.

And maybe I'm naive here, but since adding affiliate marketing, if the revenue was going to be guaranteed anyway, wouldn't there be a drop in $200,000 from the regular revenue?


isn't having a form field for discount codes at checkout a very common approach? I'd say that 90-95% of the websites I normally buy stuff from use it. Amazon does...


Being common doesn't mean it's working. Every single time I see a coupon box I have to search for a code. Then sometimes I get pissed if I can't find a discount and go somewhere else.


But the author clearly states that they "rarely have any publicly available discount codes active on our site."

Why have a checkout process where you are going to send a non insignificant percent of your users on a wild goose chase, possibly annoying them and/or distracting them when they were about to buy a product. Then blame your affiliates for "scamming" you. It doesn't make much sense.


Also note that discount codes are different to voucher codes, such as gift vouchers, which I believe is what Amazon does.

For a client of mine we added a discount code box to the checkout and got a surge of calls from people asking how to get a discount code. It was actually intended for some multi-channel marketing.

We now don't have discount codes in the checkout process.


I don't follow.

Where did the extra $200K in sales come from and why is he not happy about it? It sounds like there is a pool of customers that will not finish the purchase unless they can google "kogan coupon" and hit few coupon sites beforehand (even if to leave these sites emptyhanded). So the affiliates appear to help convincing on-the-fence visitors and push sales to completion. If anything, it's a clever hack. Not sure why he's so pissed.


There is no extra $200k (which should have been the first sign -- "we're making $200k less, but the affiliates are making $200k more!").

And since they don't actually give out a coupon, it's doubtful it helps anyone but the affiliates.


But he never says that. He doesn't indicate whether revenue increased, decreased, or stayed the same - something that would have been really nice to know.


I can't speak to what is actually happening but I can correct your misunderstanding. The author thinks that the users who had visited affiliates' fake discount code sites (and not found discount codes) would have completed their transaction anyway if those sites had not existed.


I got the same impression. I believe the true value of these particular affiliate marketing partners are down to this very point. Do they help convert lost sales, or do they claim ownership of sales that would have completed?

The article does not explain this. What evidence suggests that those customers would have completed anyway, and has this only displaced revenue rather than increased it.


I came here to ask the same question. The post comes across as if those $200k were on top of baseline revenues.


Right. He made it seems like he got an additional 200k in revenue and then proceeded to reduce commissions to zero. Some might call this scamming the affiliate. After the affiliate has put the work in to drive the traffic to your site then you fuck them over on commissions. To be honest there is a lot more fraud on the advertiser side of the deal. Conversion shaving, reducing commission on high performing affiliates, non-payment by advertisers. Affiliate take on a great deal of risk, especially when they PAY to generate traffic.


I don't think this is "scamming the affiliate", but simply testing the price elasticity of demand. Nothing wrong with that.

By simply testing different pricing models the author observed this demand anomaly, which leads him to uncover the platform's modus operandi.

I just wanted to point out that that part of the story is not that clear/well explained.


If you visit the site, put stuff in your cart and get all the way to the checkout page, you must know by that point who sent them to your site. If the customer then goes away and googles for voucher codes, it shouldn't change the source. When (if?) they return, you should know they are the same person, from the same original source.

How did the affiliates manage to steal these customers? It seems to me like your referral tracking is massively broken.


Affiliate networks require you put their code on the "thank you" page shown after checkout. Conditionally removing that code would be seen as an attempt to scam the network and get out of paying commissions owed. What you're proposing doesn't work anyway -- you don't know that they didn't come through an affiliate link a week prior; the cookie isn't on your domain, but you owe a commission for that referral.


Correct. There's a "blind" tracking pixel at the checkout page that will usually catch the sale in a "last cookie wins" fashion. So on top of the advertisers, anyone actually facilitating the sale by advertising is ripped off by the coupon sites. It's a major pain for the industry - the only surefire way to protect yourself is to get rid of drop either affiliate marketing or coupon codes.


"you don't know that they didn't come through an affiliate link a week prior"

Does that mean you have to fully trust the affiliate with how many referrals they claim to have made?


Many times it's the last referral that gets the commission. This is why coupon code sites are a pain to both affiliates and site owners.


It's not so much stealing the customer as it is rescuing the order. It may not be the most ethical of techniques but they are claiming a bounty for converting abandoned carts.

Like someone else said earlier, the order process is broken by encouraging users to leave the website and potentially forget the order.


My guess is they check the cookie after the checkout, which is somewhat reasonable. This is an edge case that became a major case due to this scam.


This article is so bad. I mean, there is a lot wrong with the affiliate world. Believe me. And, it attracts more than its fair share of shady characters. But, this guy is reckless and woefully uneducated.

I was all settled in for a sordid tale of intrigue or some yarn about a clever heist. I could spin a few of those stories myself.

But, of all the things this guy picked on, it's that his traffic is searching for discount codes and coming back with an affiliate tag? This is not a scam. It's perfectly legal and anyone wading into affiliate marketing should do his research and understand how it works. It's not just activating a magical digital sales force. Like any other marketing, it needs to be understood, researched, and applied to the business properly (or decided that it is not a good fit for the business).

The first tell-tale sign is that he didn't even know who his affiliates were. He just blindly flipped the switch. He could (and clearly should) have hand-picked his affiliates and worked with them to cultivate the activity he desired. It's ridiculous to blindly open the flood gates and complain about what comes floating in, then declare the whole affiliate marketing space one tremendous scam.

Even now, this is so easily fixable and could really be used to his advantage. His customers are telling him exactly what they want. He also knows where they are going to search for discounts. One supremely simple step would be to start creating and marketing the codes himself to his current customers. Let them know that the best codes are sent to their appreciated customers. Another step would be to cull his affiliate partner list to those where his users (and presumably others like them) are actually going to find his codes. He should also start by working with his account manager on the network (assuming he sprung for one) to devise a strategy around his goals. For instance, on all major networks, he can explicitly indicate that his affiliates cannot engage in keyword bidding or search engine marketing.

There's not enough space here to get into it. I understand his frustration, but he is being irresponsible and reckless in making the generalized statements he's making.


"woefully uneducated" indeed. why didn't he tell the affiliate network "no coupon sites, no trademark bidding, and approval required for all new affiliates."

Those are three of the most utterly basic things any new affiliate program would do.

His real complaints should be that he lacks knowledge in this area, didn't hire people who have it, and got poor customer service from his affiliate program.


Well (and concisely) put.

He could've easily shut down all of that activity or even experimented with it in a controlled fashion with select affiliates, getting near-immediate feedback and optimizing (or then deciding against it).


I agree and we do this too on our site. We target our marketing efforts, we don't just throw money out without thinking about it.


> I mean, there is a lot wrong with the affiliate world. Believe me. I was all settled in for a sordid tale of intrigue or some yarn about a clever heist.

same here, i was waiting for a juicy tale. there is plenty of scams and dodgy stuff going on the affiliate world. this isn't one of them.


Kogan.com itself seems pretty scammy. An auto-loading give-me-your-email pop-up that doesn't appear to have a close button. Nice.


Welcome to the wonderful world of brandbidding - and yes, you facilitated the scam by using coupon codes (hint: by 2013, they do you a major UX disservice for the reasons everyone is mentioning). It's been out there for a decade, but networks still do a horrible job at explaining the situation for you, as they're cashing in as well. Affiliate marketing is no more of a "free lunch" than all the other marketing methods out there. You got to either know your shit to protect yourself from fraud or pay someone to do it for you. Either way, you need to actively manage your publishers and watch out for the metrics you presented for all of the channels you're employing. If you're handing out free money without looking after what you are getting out of it, be sure that there will be someone to claim it. Wisely used and managed, affiliate marketing can definitely be another valuable tool in your marketing chain, but the total costs will be comparable to anything else.


There's a lot wrong with this article and it stinks that this person paints the entire affiliate canvas with a poop-colored brush. The fact that they continuously pushed the commission all the way down to 0% is also terrible for affiliates. As people in the comments stated, this was a poorly run affiliate campaign and is no fault but their own. There's "shysters" in every business, and the fact that they pushed down the commission to 0% for all of their affiliates and not just ones taking advantage the coupon code entry field to base their affiliate site on makes me label Kogan.com as "shysters" moreso than all of the affiliates they tried to portary in that light.

Manually approve affiliates that will add value, remove affiliates or don't approve affiliates who are going to advertise non-existent coupon codes. The end, don't treat an affiliate campaign as an easy money button.

edit: And they also seem perplexed that affiliates kept sending $200,000 in sales no matter the commission. True evidence they had no knowledge of how affiliate sites work. If they're performing well, webmasters can essentially set them and forget them. It's not like they're actively working 8 hours a day pushing sales, it can be a static website that never changes as long as the revenue is steady for the affiliate.


I want to know what kind of network would keep an advertiser that pays nothing.


So it sounds like there's an opportunity for someone here. If you read to the end of the article, you'll note that the actual scam is in spinning up discount code sites.

We need a Rapgenius for online discount codes. Right now, it's full of scummy, crappy sites (just like lyric sites), but could be easily improved with a simple interface, minimal advertising, and collaboratively sourced content.



Retailmenot has gotten much more scammy over the last few years.


It's actually gotten more legit. Most of the coupons are seeded there by vendors themselves these days. Which is how they just IPOed for a billion dollars.


The original point was to get discount codes that weren't given out willy-nilly by the vendors, so I'd say that makes it less useful/legit, not more.


I've tried to use RetailMeNot in the past, and their coupons have never worked. I think they are part of the author's "big ugly affiliate scam"


We recently launched (http://www.robotoatmeal.com/pages/about/) to address this. We're addressing the scam coupon issue by surfacing real time usage data. We also try to validate the coupon before it's published on the site.

While I think we can definitely do better (the data is pretty sparse in some areas), I believe the collaborative / real time validation approach will lead to a better experience for shoppers.


I know http://www.hotukdeals.com/ have branched out into discount codes at some point, but they're obviously UK-only I'm not sure how many people use that section of the site.


Worth mentioning that HUKD were referred to the IAB over their voucher code practices.

http://www.affiliate.me.uk/affiliate-news/online-deal-site-i...


you're about 10 years late boss


There are over 600 sites purporting to offer "Improvely coupon codes" despite there never being any kind of coupon code box on my signup form. It's a bit ridiculous, especially since none of these sites are being paid an affiliate commission for their fake coupons.


For their fake coupons to your site, that is. If someone ultimately clicks through to another site, the affiliate may still get their commission.


My guess is that they auto-generate pages based on keyword scraping from Google trends, news sites and so on.


While the OP did run into some interesting problems that many of us in Internet Marketing face, I was very thrown off by the direction this post took. There was a pretty substantial lack of understanding of cookie tracking and first-click/last-click attribution.

The affiliates didn't do anything wrong here, which was ironic, because I've met affiliate marketers at conferences in Vegas, and there's PLENTY of shady stuff that some of them do. That said, none of that is taking place here.

Ranking for "name of company I'm an affiliate for" discount code is practically step 1 on the affiliate SEO checklist. This post was almost comically misleading, to be candid.


"and there's PLENTY of shady stuff that some of them do". I assume you are talking about things like cookie stuffing and fraudulent purchases. In that case yes it is a scam, but this author is crazy to just flat out say all affiliates are scammers. I bet he sent $400 to nigeria and never got his $2.3 million royalty back.


So where did the 200K come from? Or did the sales just remain at status quo, while the affiliate claimed an increase in sales? In which case, why didn't the alarm bells ho off right that second?


Person doing the advising was obviously clueless. What happened should have raised a red flag right away.


Yeah, I think everyone running an ecommerce site and an affiliate marketing campaign has seen this. I don't think Kogans stats on the new customer percent are really an outlier. I have yet to see a coupon site that I could see actually provided us with any value to have as an affiliate.

We also a long time back went down the road of paying a network a lot of money based on their promises of the type of affiliate sales they could provide. The traffic was horrible, generated a ton of fraud when there actually were sales and the program was canned after probably only 100 sales. So definitely would stay away from any major investment with an affiliate network.

That being said there are good affiliates out there (like to think I have been one myself promoting products rather than ecommerce brands) that will deliver great customers. Likely though you will have to do the leg work to find them, they won't just join your program.


The major red flag for me in this article was the line "He couldn’t really answer the questions, but I agreed to run a small trial. Based on our results, that marketing consultant is no longer with us." It really colored the rest of the article for me - making me incredibly skeptical of the manager and his instinct, opinions and judgement. It was no surprise then when the reason he was "scammed" was because his checkout process had the form equivalent of a big red call to action saying "leave my site" in the discount code box. I always Google for discount codes when I see those boxes.

If anything, this should be read as an educational piece for consumers about who is really making money when you search for discount codes online, rather than outrage at the affiliate marketing world.


The major red flag for me in this article was the line "He couldn’t really answer the questions, but I agreed to run a small trial. Based on our results, that marketing consultant is no longer with us." It really colored the rest of the article for me - making me incredibly skeptical of the manager and his instinct, opinions and judgement.

That's interesting. Here's an article by someone you don't know and, within the first paragraph, you are "incredibly skeptical". I think most people's normal reaction would be to give the guy the benefit of the doubt - after all, it's the first paragraph and that person knows a lot more details about their business than the first paragraph will give away. I think most of us would read that line in the beginning, file it away for verification/thinking as we read the article, then revisit that after we've been presented much more of the article. For you to color your view so easily and quickly is interesting - it's almost akin to someone walking around "looking for a fight".


> ...file it away for verification/thinking as we read the article, then revisit that after we've been presented much more of the article.

That's exactly what skeptical means.


So when someone makes a reasonable suggestion that doesn't work out, you fire them? Yeah, that sounds like a company I'd want to work for.


These guys really need a good affiliate manager. On most networks you are allowed to specify the rules - no coupon code sites if you so wish, and all affiliates using it can have their commissions revoked and get banned.

Affiliate marketing can be a great way to make sales - think about it this way: you pay the network, which in turn pays the affiliates say 20%. These affiliates then use their own methods (their own sites, Facebook ads, AdWords, forum posts, a lot of stuff that you'd normally never think of) to drive traffic. They do all the marketing and you make sales - the only thing they don't do is manage your brand, if you are worried about that you're better off without affiliates online.


This is not a scam, but simply unawareness by Kogan. Affiliates want to make money - they're rational people. They'll do anything to make money as long as you don't take action.

The funny thing is if you forbid affiliates to have discount codes/coupons, affiliate marketing is not worth it at all. It's only the loopholes that keep affiliate marketing as profitable as it is right now. I mean who in their right mind would want to exert effort to bring traffic where .01% of it converts just for a measly 5% commission? No. You have to cheat a little to make it worthwhile.


If you aren't experienced / competent, and you try to outsource it, you're going to get taken. In this case it was marketing, but you could easily be talking about outsourced development, buying a car, seeing a new dentist, etc.

The proper way to introduce affiliate campaigns to your product / service is to succeed using paid advertising in-house. You need to establish your typical CTR, EPC, CPA, LTV, bounce rate, for different channels. Restrict the channels that affiliates use. Once you have your baseline, you can look at the numbers for each individual affiliate to determine their numbers stack up against your baseline. There are a lot more details that can't fit into an HN comment made on my way to work heh.

One concrete example, so it's more tangible. If you don't explicitly restrict pop up traffic, affiliates can pop and drop their cookie when someone with adware installed visits your domain.

Edit: This story is very one sided. Sure the marketing consultant was probably sleazy, and the affiliate marketing tricks were unethical, but the op did not even do basic due diligence. If I were the op, I would at least look at how the affiliate marketing programs of other mature ecommerce sites were set up. Amazon for instance has an affiliate fee of 4% on electronics. Paying 10% instead of 4% as affiliate fees is a red flag. Amazon payouts are made 60 days after the marketing period, where they can conduct their fraud analysis. Also you should be paying very close attention to their operating agreement which outline what does and does not earn you an affiliate fee.


We're working on a solution to allow merchants to get users to unlock coupon codes directly on their site (without having to go via an affiliate).

Seeing stellar results so far with plenty of feedback for improvement (we're in beta). If anyone is interested in helping us test the concept further, hit me up!

https://gleam.io/app/rewards


Even though it seems like your setup is not really good, (as others have remarked here) I think the central question you posed here still holds up to some extend: "where do they get their traffic from?".

When getting involved with aff-networks I have noticed that there are quite a lot of 'low quality' (of course depending on your needs) networks around that basically lure people into visiting your site, other than referring truly interesting people to you. That seems like business 1-0-1, but it really amazed me how many large networks use shady landingpages with obscure lotteries and other 'prizes'. (This was a about 2-3 years ago, but still..)

Always do a small run first, track what's happening and why and always be suspicious about people 'selling' you other people's data/attention (data-pushers, is what I used to call them) because that's basically what is is, to some extend.


But I think that's the point - the traffic is effective the merchant's own. They're not driving spammy visitors or buying false visits; they're just redirecting the customers who would have already been browsing the site back to the checkout funnel - they'd just get the benefit of the affiliate tracking code added to the order.


In this case: yes. (Or for the most part.)


I'm suprised Retailmenot doesn't get called out for this link baiting more often. I've studied their practices for years now and they do alot of shady stuff.

I remember posting coupon codes to their site and having them being taken down constantly because they weren't getting commission on them. They were original company specials so no affiliate was getting paid (including me) but I posted them merely for the people who were searching could save money. They gave users 50% off hosting and the links on the retailmenot page were simply regular links to the products page disguised as specials.

When I emailed them asking why they keep deleting my posted coupon they said that any specials need to be run through them and they need a way to track aka put their affiliate id on them.

Left a bad taste in my mouth.


When I saw Ruslan Kogan listed at the top, I thought the story was about him ... same guy who launched the IE tax publicity stunt - got to wonder if this is more of the same.


good spot. i was thinking the same myself. he just got a do-follow link from a PR7 blog for this post, so it was definitely worth it.


This story would have been just as informative without the words "ugly", "shocked", "shyster" and "scam".


This is another reason why you should rank for [your brand name] + coupons / discount. Read Zappo's take on coupons http://www.zappos.com/truth-about-zappos-coupons . If people know they can save 5-10% by a simple search they will at least try a quick search.


Zappos understands that coupons are bad for all sides of the equation. Just give customers the best possible price. Then you don't have to worry about people hijacking your checkout process (which you are pretty much responsible for causing if you use coupon codes).


The user flow issue that Ruslan is describing was probably already happening before he signed up for an affiliate program. The only thing that the affiliate programs did was expose that he may want to rethink the way he offers coupons on his site. Like most others have said, whenever I see a "Discount Code" box, I go search for the code.


Lessons learned: only pay affiliates whose customers forwards lead to a new shopping session, not an existing shopping session.


Sounds like the bigger problem is showing the user a discount code field when not utilizing discount codes.

Remove the field, not the affiliates


What about limiting affiliates with advertising a Kogan related keywords and even some traffic sources? I've seen such limitations for many of brands represented in the affiliate networks.

If managed properly affiliate marketing definitely works and yes, it's worth expanding to.


Of course a lot of people are trying to leech revenues in Affiliate marketing, that why affiliate need to be reviewed and monitored. It's not a scam you just accepted to do business with people without checking where their traffic comes from.


How the hell did he not notice his overall sales not being affected by $200k/wk. I figure you'd be able to tell right away if your sales went up that much.


On the topic of networks- anyone know a good affiliate network for startups?


This is more than a scam, it's outright theft.


It's not theft. You put a coupon code box on your checkout. How can you NOT expect people to go look for coupon codes?


My interpretation of the article is they charge the company for a referral even if a coupon isn't found or used. That's theft. Or did I misread? It's not just looking for coupon codes (which isn't bad) but mischarging. (It's not the customer that's stealing, it's the referral service)


I don't quite get it.

Was there sales growth of 200K or not? Yes/No - it's that simple.

It seems like this would be the main thing to look at.

But instead the post goes into hypothesis - almost like either:

A) The answer is so blatantly No that it does not need addressing.

B) He's trying to sweep the above question away because he dislikes the idea of Affiliates driving previous visitors back for more business.


It's called cookie stuffing. Your company should have done your research before doing affiliate marketing and taken steps to prevent this kind of fraud.


Cookie stuffing is something different; that usually refers to outright trickery like embedding affiliate links in images or malware. This is just affiliates taking advantage of the fact that if you put a coupon code box on a checkout form, people will search for coupons right before checking out. Run a coupon site, put a "click here to activate coupon" link on it, and suddenly you're being paid for sales the merchant was already going to get.




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